Singapore's FDI flows were down 37% in 2020

FOREIGN direct investment (FDI) flows into Singapore fell by 37 per cent to US$58 billion last year, noted an Investment Trends Monitor report by the United Nations Conference on Trade and Development (Unctad).

Singapore's FDI decline was gentler than the global contraction of 42 per cent to US$859 billion, from US$1.5 trillion in 2019. The collapse left FDI flows more than 30 per cent beneath the trough that followed the global financial crisis in 2009.

However, Singapore's fall in FDI was steeper than that for Asean as a whole, where FDI fell by 31 per cent to US$107 billion.

Within Asean, Malaysia experienced the steepest decline, with FDI plunging by 68 per cent to US$2.5 billion. FDI fell in Thailand by 50 per cent to US$1.5 billion, in Indonesia by 24 per cent to US$18 billion, and in Vietnam by 10 per cent to US$14 billion. The Philippines bucked the trend; its FDI flows rose by 29 per cent to US$6.4 billion.

Nevertheless, the report said the strength of South-east Asia as an FDI engine remained evident. South-East Asia registered over US$70 billion in new greenfield investment projects last year, the largest volume among developing regions. This was a more moderate contraction in announced greenfield investments (-14 per cent) than in other developing regions.

In addition, Singapore's uptick in the number of projects in Q3 2020 could point to an impending FDI recovery in the region, said the report. The recent signing of the Regional Comprehensive Economic Partnership (RCEP) could also help to renew FDI growth.

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Globally, Unctad's report highlighted divergences in FDI flows between the developed and the developing world. Developed countries took the steepest hit, with FDI flows plunging by 69 per cent to a nearly 25-year record low of US$229 billion. FDI flows to developing countries fell by a more moderate 12 per cent to US$616 billion - now a record 72 per cent of the global pie.

By region, flows in Europe were effectively erased, from US$344 billion to negative US$4 billion. FDI in the European Union fell by two-thirds, while flows to the United Kingdom dried to zero.

North America was next hardest hit, with a decline of 46 per cent to US$166 billion. FDI in the US fell 49 per cent to US$134 billion.

Developing Asia proved most resilient, with only a 4 per cent contraction. Notably, FDI in China increased by 4 per cent to US$163 billion - bumping China ahead of the US as the world's largest FDI recipient, as of 2020.